A penny saved: Kenya's cooperative saving scheme and some related aspects of rural finance

Within two years of its transformation from a pilot project to an on-going savings programme for smallholders, the Cooperative Savings Scheme's balances increased from Sh 2 million to almost Sh 37 million, and the number of depositors exceeded 110,000. By the close of 1974 these balances will no doubt exceed Sh 60 million, belonging to 150,000 co-operators. Cooperative Savings Scheme balances have a considerable impact on cooperative finance and at the close of 1973 exceeded by Sh 22 million the amount of loans outstanding on the books of participating societies under the Cooperative Production Credit Scheme, a companion programme. The Cooperative Savings Scheme operates in rural areas only and most depositors are members of primary coffee marketing societies. The Cooperative Savings Scheme exhibits several operational and management problems and cannot yet be considered mature. However, its performance during a period of generally favourable conditions in the smallholder coffee sector suggests that considerable rural savings capacity exists among small cash crop farmers and that this capacity is not tapped by financial institutions other than cooperatives. Savings is defined simply as deferred consumption, and the financier's view of savings as a funds flow phenomenon is more relevant to rural development than are considerations of savings as an institutional phenomenon motivated by long run considerations.